Commentary on Political Economy

Tuesday, 11 October 2011

Origins of Bourgeois Individualism - Part 2

The IS-LM Model espoused by Krugman merely "side-steps" the entire problem of the nature and significance of money in a capitalist economy: this is a bit like a theologian "evading" the question of the Divinity or Being, or a chemist neglecting to comprehend the structure of atoms. The IS-LM does not even seek "to explain" the existence of money (in a capitalist economy!) but simply takes its existence "for granted", as "a fact of life"! Actually, it does more than that: it presents money as if it were a mysterious and ineffable presence in society. That master magician and confabulator, that clown of a theoretician that was J M Keynes even called it (mysteriously) "the link between present and future", the source of (existential?) "uncertainty", the "kryptonite" for which all "investors" reach in times of low "animal spirits", when "the economy" is in a "liquidity trap" (Krugman uses the IS-LM model almost exclusively to address the "conundrum" of the Keynesian "liquidity trap" when interest rates are at "the zero-bound"). What the IS-LM model does is it allows bourgeois economists to sidestep the question of money (of its essential role in a capitalist economy) by literally (!) drawing two "parallel" lines of analysis that actually (miraculously!) "intersect" on a graph whose co-ordinates are the money supply and the interest rate. The "interest rate" that was supposed to be "the result" of real forces in "the economy" is now presented as "the determinant" (!) of the level of output and employment! Furthermore, this "interest rate" is no longer a function of "real" (in natura, as Wicksell called them) factors of production, it is not "the natural (!) rate of interest", but rather is expressed in...."monetary" terms! Miracle of miracles! The transubstantiation of Christ in the Eucharist! The Spirit become Word! Has anybody ever "witnessed" a greater "mystery"?

By leaving out the entire socio-political "significance" of money, the IS-LM model of "the neoclassical synthesis" steadfastly refuses to confront the true reality of capitalist social relations of production, of what determines and gives meaning to "market prices". By so doing, it perpetuates the "fiction" that the capitalist economy is really a "natural", "physical" process of production where "prices" merely represent the "proportional marginal product" of the "factors of production" - labour and capital. In this "perspective" - the philosophical and social origins of which we have tried to delineate on this site -, labour and capital appear as "independent" and "separate" factors or inputs of production or "output". But the most important fact is that "labour" is presented as an "aggregate" of "individual (!) labours" that can be "remunerated" through individual "wages" - that is to say, through the "monetary" equivalent of the "dead labour" objectified in the "product" or "output". It therefore comes to pass that the real "dominant" part of the process of production is not the "living labour" of workers, but rather the "capital" that is embodied in the "means of production" (tools, machinery and materials) without which the "living labour" of workers would be completely unable to produce anything at all! Thus, the real "wealth" of production ceases to be located - as it must - in the "living labour" of workers and in their "interdependent social labour" (because it is impossible and absurd to speak of "the division of labour", for there can only be a "division of the tasks" of what is indivisible and indissoluble "social labour"), and this "wealth" or "productive power" comes to be identified instead with "capital" itself which not only is "necessary" for living labour to become "productive" but is also "responsible" for "bringing together" or "concentrating" the "individual labours" of workers paid in wages!

So you can see now how Paul Krugman's "innocent" and "progressive" presentation of the neoclassical synthesis in the IS (investment-saving) and LM (liquidity-money) Model comes to be a gigantic, monstrous intellectual and political LIE that completely mystifies and traduces the social reality under which capitalism operates! And you can see now why the bourgeoisie is in dire need of the "strategy" or ideology of "individualism" whereby the social labour process and process of production are presented as "individually separable" inputs!! They are "individual" only because they are "separated"! And they are "separated" by means of the sheer violence of the wage relation! Money is needed therefore to mystify the reality of this "separation" by allowing the "artificial and politically-imposed", VIOLENT SEPARATION of living labour from the "means" of its expression, of its production - what is called "capital" - so that the living labour of workers can appear as a homogeneous, quantifiable entity - called "labour" - that can then be "divided", sliced and "measured" like any material "thing" - as "dead objectified labour" that forms a part of the "capital" (the "wages fund") needed for capitalist production!

Here, in a nutshell, are the real social origins of bourgeois individualism. We are still some distance from staring down the ghost of "the capitalist entrepreneurial spirit", the Schumpeterian Unternehmergeist, the scimitar-wielding defiance of the "captain of industry", of all the combined Steve Jobses of this world - but stare it down we will - and soon!